Remortgaging During The Current Pandemic, What Should You consider?

The ongoing pandemic, numerous lockdowns, Brexit, job insecurity and ever-changing Government guidance has caused a lot of homeowners to apply an extra level of caution when considering their mortgage options.

There are an array of reasons why people choose to remortgage, from home improvements to debt consolidation, and this past year has proved difficult for many to achieve their goals.

Due to the Covid-19 pandemic, mortgage rates have dropped significantly, with the Bank of England base rate dropping to just 0.1%, a historic low. If one thing is certain it is that the base rate will rise again at some point, when that will be no one knows. The current low mortgage rates are a great opportunity for the savvy borrower to review their options.

Recent research conducted by a broker firm showed that 80% of property owners believe they could get a better mortgage deal than they currently have. An estimated 1.43 million homeowners said they have been putting off changing their mortgage due to time or hassle. The average saving when switching mortgage deals is around £236 per month, so it is worth taking the time to see if there is a better option for you, especially when rates remain attractive.

Lenders are said to be preparing for a busy remortgage market in the second half of 2021. This is partly due to the end of the furlough scheme which is set to run until the end of April 2021, and what happens once it finishes will influence people looking to remortgage. Millions of homeowners on furlough have been restricted when it comes to reviewing their options with a lot of lenders reluctant to lend to those on the scheme.

As the pandemic has unfolded people have been spending more time at home than ever before. Home working is likely to continue into the foreseeable future and improving home working space will be ever more important. Furthermore, it is expected that homeowners will want to maximise their property potential to provide a better standard of living. Due to this home renovations will be key, and a remortgage may be an option to some to finance these plans. A survey by Natwest found that while only 19% of people remortgage for home improvements, 62% would consider switching a deal again to renovate their properties.

As we look forward into 2021, we are seeing lenders increase their borrowing limits to 90% Loan to Value which means homeowners can apply to borrow more equity than they could during the height of the pandemic. However, be mindful that each lender will need to do their own valuation on your home, so this could impact the maximum you can borrow.

If you are considering a remortgage, we would advise you start the process earlier rather than later.

The reason we advise this is due to lenders continuing to apply stricter lending criteria and processes, so obtaining the best mortgage available is proving to be a longer process than it would ordinarily be. A remortgage offer is generally valid for 6 months which means you can secure a rate up to 6 months before you are ready to proceed. Many people will use price comparison sites, but these do not show mortgage deals available to mortgage advisors, so if you are looking for the best rate available to you speaking to a mortgage broker will give you access to a larger pool of options. The great thing is, you do not need to leave the comfort of your home to arrange this, one of our experienced mortgage advisors can call you at a time that is convenient.